This post was originally published on The FinTech Times
The digital banking scene in the Middle East and Africa (MEA) is undergoing a significant transformation, with neobanks and challenger banks emerging as key players in reshaping financial services.
These digital-first institutions are bridging gaps in traditional banking, offering innovative solutions to meet the needs of a diverse and underserved market.
Neobanks in the MEA region, much like their global counterparts, operate solely in the digital realm, without any physical branches. On the other hand, challenger banks are predominantly digital but may have limited physical presence, distinguishing them from traditional banks. It’s worth noting that digital banks can fall into either category, whether neobanks or challenger banks.
While neobanks are still in their nascent stages compared to more mature markets like Europe and the US, they are gaining traction in the MEA region. This is particularly significant given the challenges individuals and SMEs face in accessing traditional financial services, such as opening bank accounts. Neobanks and challenger banks in the MEA region have emerged through two main avenues:
Banks creating their own neobanks
Unlike in regions like the UK, where neobanks are typically independent entities, in the MEA region, traditional banks have taken the lead in establishing neobanks. This has been achieved either through
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